Book Review: The Behavior Gap
What is the difference between what we do with our money and what we should do? It’s called The Behavior Gap and there are strategies and helpful information on how to close it.
Book Summary Notes:
- The Behavior Gap is the gap between what we should do and what we actually do. It exists almost everywhere and people suffer because of it. Sometimes it may be caused by something like ‘herd mentality’ which is where everyone else is doing it so, so will I! It can also be a result of the fact that we are wired to seek pleasure and avoid pain, because sometimes doing the right thing can be painful.
- Your financial decisions should always be based on personal goals. When contributing to an investment or going out to eat at a fancy restaurant can be a tough choice. It’s made much easier if there is a solid goal attached to why your investing. Maybe it’s for retirement or so that you can move from a 5 day work week to a 4 day one. Whatever it is make sure it’s important to you.
- Most of the financial advice offered in the media is completely generic in nature and not at all suited to your personal situation. Keep that in mind before you act on any of the advice given.
- The level at which money makes us happy eventually has a cap to it. Beyond that point it simply becomes a tool to further our personal goals. Remember this as your trying to accumulate it. That cap by the way was shown to be about $75,000 a year.
- A lot of what is proposed in the mainstream media uses the leverage of ‘herd mentality’ to try to make you desire something or distract you from your more important financial goals. Remember this.
- Be aware of the distractions that will likely manifest along your journey. Unexpected expenses are to be expected so plan for them. Give yourself a financial buffer like a bills account and a emergency savings account.
- Remember that the best investments and decisions are often the simplest. Keep your strategies simple and easy to follow to give yourself the best chances of success.
